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Con Joint Analysis

This document provides an overview of conjoint analysis, a market research technique used in new product development. It discusses how conjoint analysis works, the different types (rating and choice-based), and the three stage process of designing, collecting data, and exploiting the results of a conjoint study. Specifically, it explains how conjoint analysis determines how consumers value different product attributes and uses that information to estimate market shares and optimal product configurations.

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Ansa Asif
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© © All Rights Reserved
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64 views

Con Joint Analysis

This document provides an overview of conjoint analysis, a market research technique used in new product development. It discusses how conjoint analysis works, the different types (rating and choice-based), and the three stage process of designing, collecting data, and exploiting the results of a conjoint study. Specifically, it explains how conjoint analysis determines how consumers value different product attributes and uses that information to estimate market shares and optimal product configurations.

Uploaded by

Ansa Asif
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Marketing Models

MKTG 343

Conjoint Analysis

1 lecturer: Muhammad Asim


2 Objectives

 Appreciate the use of conjoint analysis in new product design


https://www.youtube.com/watch?v=Su2qIrTmv1c
 Implement Conjoint Survey using Sawtooth Software and evaluate key technical and
managerial considerations in designing Conjoint Studies (Sawtooth readings on lms)
 Implement and interpret results of conjoint survey data using multinomial logit models
(textbook sections 13.1 & 13.3)
 Be able to determine the optimal configuration of a new product or service that should be
launched in the market using conjoint analysis (Group Project)

01/07/2023
3 Conjoint Analysis
 Conjoint Analysis is a systematic approach for
matching product design with the needs and wants of
customers.
 Used especially in the early stages of the New
Product Development process.
 Most commonly used market research method

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What Does Conjoint Analysis Do?

 Determines how people value different attributes that make up an individual


product or service.

 A controlled set of potential products or services is shown to respondents

 By analyzing how they make choices between these products, the implicit
valuation (part-worths) of the individual elements making up the product or
service can be determined.

 Used to estimate market share, revenue and even profitability of new designs
Conjoint Analysis is based on the Multi-attribute
Utility Framework
Product

Attribute Attribute Attribute

Level Level Level Level Level Level Level


Products are bundles of attributes
Your next holiday trip

Transportation Destination Budget

Plane Bus Beach Mountain Rs. 45,000 Rs. 60,000 Rs. 80,000
Types of Conjoint Analysis

 Rating based conjoint (Customers evaluate different product


bundles by rating or ranking)
 Modeling options: Dummy Variable Linear Regression; Hierarchical
Linear Model
 Choice based conjoint (Customers make a choice between 2 or
more product bundles)
 Modeling options: Multinomial Logit Model; Mixed Logit Model
Designing a Frozen Pizza
Attributes
• Type of crust (3 types)
• Type of cheese (3 types)
• Price (3 levels)
• Topping (4 varieties)
• Amount of cheese (2 levels)

Crust Topping Type of cheese


Pan Pineapple Romano
Thin Veggie Mixed cheese
Thick Sausage Mozzarella
Pepperoni

Amount of cheese Price


2 Oz. $9.99
6 Oz. $8.99
$7.99

A total of 216 (3x4x3x2x3) different pizzas can be developed from these


Designing a Frozen Pizza
Rating Based Conjoint Analysis
Attributes/ Type of crust Topping Type of cheese Amount of Price Customer
Bundles cheese Ratting
Bundle 1 Pan Pineapple Romano 2 Oz. 9.99

Bundle 2 Thin Pineapple Mixed 6 Oz. 7.99

Bundle 3 Thick Pineapple Mozarella 2 Oz. 8.99

Bundle 4 Thin Pineapple Mixed 6 Oz. 8.99

Bundle 5 Pan Veggie Mixed 2 Oz. 8.99

Bundle 6 Thin Veggie Romano 6 Oz. 8.99

Bundle 7 Thick Veggie Mixed 2 Oz. 7.99

Bundle 8 Thin Veggie Mozarella 6 Oz. 9.99

Bundle 9 Pan Sausage Mozarella 6 Oz. 7.99

Bundle 10 Thin Sausage Mixed 2 Oz. 9.99

Bundle 11 Thick Sausage Romano 6 Oz. 8.99

Bundle 12 Thin Sausage Mixed 2 Oz. 8.99

Bundle 13 Pan Pineapple Mixed 6 Oz. 8.99

Bundle 14 Thin Pineapple Mozarella 2 Oz. 8.99

Bundle 15 Thick Pineapple Mixed 6 Oz. 9.99

Bundle 16 Thin Pineapple Romano 2 Oz. 7.99


Designing a Frozen Pizza
Example Ratings Data
Attributes/ Type of crust Topping Type of cheese Amount of Price Customer
Bundles cheese Ratting
Bundle 1 Pan Pineapple Romano 2 Oz. 9.99 10

Bundle 2 Thin Pineapple Mixed 6 Oz. 7.99 40

Bundle 3 Thick Pineapple Mozarella 2 Oz. 8.99 5

Bundle 4 Thin Pineapple Mixed 6 Oz. 8.99 80

Bundle 5 Pan Veggie Mixed 2 Oz. 8.99 30

Bundle 6 Thin Veggie Romano 6 Oz. 8.99 5

Bundle 7 Thick Veggie Mixed 2 Oz. 7.99 90

Bundle 8 Thin Veggie Mozarella 6 Oz. 9.99 45

Bundle 9 Pan Sausage Mozarella 6 Oz. 7.99 60

Bundle 10 Thin Sausage Mixed 2 Oz. 9.99 15

Bundle 11 Thick Sausage Romano 6 Oz. 8.99 25

Bundle 12 Thin Sausage Mixed 2 Oz. 8.99 45

Bundle 13 Pan Pineapple Mixed 6 Oz. 8.99 85

Bundle 14 Thin Pineapple Mozarella 2 Oz. 8.99 90

Bundle 15 Thick Pineapple Mixed 6 Oz. 9.99 100

Bundle 16 Thin Pineapple Romano 2 Oz. 7.99 35


Choice-Based Conjoint
An example of a choice task
Which pizza would you purchase?

Chicken Chicken Chicken


Fajita Tikka Tikka
Thin crust Thick crust Thin crust
Veggie Veggie Olive
topping topping topping
11” 8” 11”
Rs.600 Rs.450 Rs.500
Conjoint Study Process

Stage 1 —Design the conjoint study

Stage 2—Obtain data and estimate preferences


Stage 3—Exploit the results
Stage 1

Design the conjoint study


 Select relevant Attributes
– Ask consumers, managers, experts
– Analyze secondary sources (public media, brochures)
– Select between 4 and 6 attributes maximum

 Select relevant Levels for each Attribute


– Ask managers, experts (product managers, manufacturers)
– Analyze secondary sources (public media, brochures)
– Select between 2 and 4 levels maximum per attribute
– (Try to) include the same number of levels for each attribute

 Develop the product bundles to be evaluated


– Let the software decide
– If some profiles do not make sense, review your design
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15

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Stage 2

Collect data and estimate preferences


 Collect data ( using Sawtooth)
– Develop a survey (design, scale,
prototypes)
– Select sample of respondents
– Collect data

 Estimate preferences, willingness to pay for different product features and


simulate market shares
– Use different modeling tools to analyze the data (e.g. mlogit package in R)
Stage 3

Exploit the results

 Run simulations (market shares, new products)


– Replicate the existing market
– Select scenarios (e.g. a new entrant)
– Access draw and cannibalization from the new product
Situations Where Conjoint Analysis
Might Be Valuable
 The new offering involves important tradeoffs affecting design,
production, marketing, or other operational variables.
 The offering is realistically decomposable into a set of basic attributes.
 Factorial combinations of basic attribute levels are believable.
 Desirable new offerings alternatives can be synthesized from basic
alternatives.
 The alternatives can be realistically described, either verbally or
pictorially. (Otherwise, actual product formulations should be
considered).
Summary: Utility of Conjoint Analysis
 Design new offerings that enhance customer value.
 Forecast sales/market share/profit of alternative offerings.
 Identify market segments for which a given concept/offering has high
value.
 Identify the “best” concept/offering for a target segment.
 Explore impact of alternative pricing and service strategies.
 Plan production in flexible manufacturing systems.
22 Real-world application
 For inspiration and deeper understanding watch:
Courtyard by Marriott
https://techtv.mit.edu/collections/edelmanprize/videos/7799-
courtyard-by-marriott---1988-finalist

01/07/2023

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